Why low Housing Starts is good news for the market
June 20th, 2008
I saw this graph of the Housing Starts for the past 3 years, and I fell that it is only good news for the overall depressed housing market.
The May stats fell by 3%. The May building permits also declined, and this number is widely looked upon as a leading indicator of future activity.
Here’s the explanation of my optimism:
Less supply = More demand = Home Prices Increase.
That was easy, now we just have to see it in action!
The President of the National Association of Home Builders (NAHB) suggested that home builders are “doing the right thing.” A decline in the production of new homes will lower the supply of available homes, which is a key step in stabilizing the housing market. The NAHB also pushed for Congress to pass a housing stimulus package to boost demand.
Categories: Market Conditions, Real Estate
This entry was posted on Friday, June 20th, 2008 at 4:30 pm and is filed under Market Conditions, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Ed while this news is encouraging it is not unexpected. Builders have become a lot more cautious and are certainly like many others taking a wait and see approach to the market.
Given the poor numbers that were released today on inventory and number of sales across the country it makes sense. Resale inventory is one the rise as the # of sales has decreased tremendously.
We have a ways to go before we are out of the woods.